Policy for payment of construction firms' debt by agencies

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New Delhi: With an aim to revive construction industry, NITI Aayog is working on a policy to enable various government agencies to pay back debt of their contracting companies directly to the financial institutions or banks.

The move will help such firms reduce debt and speed up recovery process of loans. This will also help financial institution and banks to write off non-performing assets.

"This policy is at a very advance stage right now. We are taking series of measures to support construction industry," NITI Aayog Chief Executive Officer Amitabh Kant said addressing a conference organised by NAREDCO here.

Elaborating further, Kant said, "NITI Aayog has just prepared a note with a series of measures to give fresh life and to support construction industry particularly those companies which are suffering from huge debt from financial institutions.

"But arbitration awards are gone in their favour. We are going to assess those companies to ensure that government agencies (with) whom they worked are able to pay those awards to financial institution directly."

He added that: "We have held discussion with construction companies and financial institutions, we are trying to work around a package which is a win win for all -- for financial institutions, construction industry and the government, so we can give a thrust or impetus to construction."

About the government's view on the industry, Kant said, "We are convinced that we must revive and give thrust to construction. If India has to grow then construction industry has to be revived."

He also said that monetisation of land must come with development of cities.

He was of the view that in order meet the challenge of growth at 9-10 percent for next 2-3 decades, India needs to go for urbanisation in a big way.

As per his views, cities account for just 3 percent of the area while these house 60 percent of population which produced 80 per cent of emissions and 90 per cent of the wealth created.

According to an industry study, India would have to construct 43,000 houses per day to achieve its objective of housing for all by 2022. This will require investment of about USD 2 trillion.

Railway Minister Suresh Prabhu (via video conferencing) said construction industry can push the demand of steel and cement, which will help creating jobs in manufacturing sector.

Prabhu urged construction industry to participate in developing 400 railway stations as world-class multi-model transit points having all facilities like metro rail, bus terminus and taxi stand.

He informed that the government is developing Anand Vihar and Bijwasan in Delhi as mutli-model railway station having host of transport facilities.